3 of the safest dividend stocks on Earth

History has shown that we can never depend on shares for income. That said, our writer thinks these dividend stocks look better bets than most.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young Caucasian girl showing and pointing up with fingers number three against yellow background

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

No income stream is ever truly safe. However, some dividend stocks stand a better chance of consistently sending me money than others, based on their track records.

As luck would have it, a few of these are listed in the UK.


Premium spirit maker Diageo (LSE: DGE) sells many of the most recognisable alcoholic brands in more than 180 countries around the world. Importantly, these are drinks that people will keep consuming, regardless of what’s going on in the economy.

It’s this defensiveness that keeps the money rolling in, a proportion of which is routinely paid out to shareholders.

But ‘safe’ dividends aren’t necessarily ‘big’ dividends. Indeed, Diageo’s yield currently stands at just 2.3%. For perspective, the FTSE 100 index yields around 3.5%. Some companies offer ones in double figures.

However, we’re interested in consistency here, not size. As an indication of the former, Diageo has been regularly lifting its cash returns while also managing to raise its share price by over 46% during the last five years. As I type, the FTSE 100 is only up 11% since 2018!

All this keeps me thinking that Diageo would be a cornerstone investment if I were looking to build a portfolio focused on generating passive income.


FTSE 100 peer Halma (LSE: HLMA) is another dividend aristocrat. In fact, it almost puts Diageo to shame.

This group of life-saving technology providers has hiked its total payout by 5% or more every year… for the last 43 years.

I think a 44th year looks likely. After all, Halma has shown itself adept at implementing a ‘buy-and-build’ strategy by snapping up companies that will add to earnings and, consequently, dividends.

The bad news is Halma shares have long been expensive. Despite tumbling in value over the last year, the stock still changes hands at a price-to-earnings (P/E) ratio of 31.

The yield (0.9%) is also minute compared to what I could get elsewhere in the market. Even a bog-standard cash savings account now offers more.

For me, however, Halma is worth the risk for a combination of income and growth. I’d be buying this stock right now if I had the funds to do so.

BAE Systems

BAE Systems (LSE: BA) was the best-performing stock in the FTSE 100 last year, rising 55%. While the reasons for this are neither hard to fathom nor pleasant, holders should be rightly delighted.

To me, however, BAE has long appealed more as a stock to hold for income. Like Diageo and Halma, the defence giant has an enviable history of lifting its dividends every year.

It’s forecast to grow the payout by another 7% in 2023. That would leave it yielding 3.4%, based on today’s share price. Another thing worth mentioning is that BAE’s profits are expected to cover its dividends twice. This makes it very unlikely that there’s a cut on the horizon.

Clearly, some profit-taking could lie ahead if we get a merciful resolution to the Ukraine/Russia conflict. However, last year’s invasion has surely pushed nations around the world to consider upping their defence budgets.

So while I still wouldn’t prioritise buying this UK share for short-term capital gains, I think its income credentials are as strong as ever. I’d buy today if I had the funds.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo Plc and Halma Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Could the FTSE 100 be set to soar in 2024?

The FTSE 100 keeps threatening to go off on a growth spree. And weak sentiment keeps holding it back. But…

Read more »

Investing Articles

Is this FTSE 100 stalwart the perfect buy for my Stocks and Shares ISA?

As Shell considers leaving London for a New York listing. Stephen Wright wonders whether there’s an undervalued opportunity for his…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

3 things I’d do now to start buying shares

Christopher Ruane explains three steps he'd take to start buying shares for the very first time, if he'd never invested…

Read more »

Investing Articles

Investing £300 a month in FTSE shares could bag me £1,046 monthly passive income

Sumayya Mansoor explains how she’s looking to create an additional income stream through dividend-paying FTSE stocks to build wealth.

Read more »

Investing Articles

£10K to invest? Here’s how I’d turn that into £4,404 annual passive income

This Fool explains how using a £10K lump sum can turn into a passive income stream worth thousands for her…

Read more »

Investing Articles

1 magnificent FTSE 100 stock investors should consider buying

This Fool explains why this FTSE 100 stock is one for investors to seriously consider with its amazing brand power…

Read more »

Rainbow foil balloon of the number two on pink background
Investing For Beginners

2 under-the-radar FTSE 100 stocks under £2

Jon Smith identifies two FTSE 100 stocks that he believes are getting a lack of attention from some investors but…

Read more »

Investing Articles

£8,000 in savings? I’d use it as a start to aim for £30k a year in passive income

Here's how regular investing in the UK stock market, over the long term, could help us build up some nice…

Read more »